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Old Debts In Scotland And “Prescription”

Updated: 10th October 2016

What is Prescription?

Creditors may have time limits within which to take recovery action on you owe to them. Debts that have exceeded this period of time are often described as being “statute barred”.

In Scotland these rules are set out in The Prescription and Limitation (Scotland) Act of 1973. Hence the term “prescription” is generally used in Scotland; elsewhere in the UK the term “statute barred” is often used instead.

How Does It Work?

Taking action to recover a debt generally refers to the creditor being able to use the legal process. Therefore, if you can prove that prescription applies to your debt, the money is unlikely to be recoverable by the lender.

The FCA imposes rules on those that collect debts in this respect. For example, it’s considered to be misleading to suggest that legal action to recover a debt could take place if the firm ought to know that prescription applies.

Firms should also not continue to attempt to collect debts once they have been legitimately informed that the debt will not be repaid for this reason.

Different Periods Apply For Different Types of Debts

Unsecured Consumer Debts
This category includes debts such as overdrafts, credit cards, payday loans or catalogues. Provided that the lender has not already obtained a decree on the debt, that no payment has been made to the debt for five years, that you have not been contacted about the debt for five years, and you have not admitted that the money is due during that period, this debt will become subject to prescription.
The applicable period is five years.

Mortgage Shortfalls – Capital Element
Typically applies where a property has previously been repossessed.
The applicable period is twenty years.

Mortgage Shortfalls – Interest Element
Typically applies where a property has previously been repossessed.
The applicable period is five years.

Social security benefit overpayments
The applicable period is twenty years.

Housing Benefit and Council Tax Benefit overpayments
The applicable period is five years.

Council Tax
The applicable period is twenty years.

Sheriff court decrees
The applicable period is twenty years.

Income Tax and VAT
No time limits apply.

What Should You Do?

What should you do if you’re being chased for the repayment of a debt where you believe prescription applies?

It’s important to act with caution. You may wish to locate template letters online that will help you to make your case. Be careful to only use template letters provided by reputable and credible sources of help. You may prefer to obtain your own legal advice instead.

What should you do if you’ve now discovered that a debt you’re being chased for isn’t “statute barred”?

If you can afford to, you may wish to repay the debt. Alternatively, you may be able to agree an affordable payment arrangement with the creditor that will enable you to clear the debt over a reasonable period of time.

If the amount owed is very large, it will take an unreasonable amount of time to clear, or it forms part of a wider debt problem, it’s probably time for you to get debt advice.

You might discover that a trust deed, DAS or sequestration (bankruptcy) is suitable for bringing your financial affairs back under control.

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